Crossborder supply chain decisions (Q&A)

Network Business

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U.S. Army/Flickr
U.S. Army/Flickr

Many people regard choices as a good thing. However, one must realize that few choices can beget discomfort or unhappiness and too many choices leads to confusion, regret of alternatives not taken, and second guessing.  Today, the business world is more complex than it has ever been.  Adaptation to the marketplace is required in order to be successful, and therefore, choices must be made.

Choices must be made with respect to Crossborder, Omnichannel, Customer Centricity, and Final Delivery.  Without making these choices supply chains will flounder and fail.  Steps must be taken right away or risk falling behind your competition.

Jim Tompkins addressed these four topics during his keynote speech at the 2015 Tompkins Supply Chain Leadership Forum.  Attendees had great follow-up questions that required detailed answers from Jim.

We have selected two questions from each of the following topics for Jim to answer:

  • Crossborder
  • Omnnichannel
  • Customer Centricity
  • Final Delivery

Over the next few days, we will release these questions and answers in four separate blog posts. Here is part one which is based on the Crossborder section of Jim’s keynote.

Forum Attendee: I am not sure I am clear on the three different types of Crossborder you discussed. Please Clarify.

Jim Tompkins: Yes, the terminology around Crossborder is not at all clear therefore I am trying to define the terms for people and organizations to understand the Crossborder Choices they must be making. Using a US company interacting with Chinese consumers, here are my three terms and examples:

  • Crossborder Business: When a US company creates a Chinese division to replicate their business in China. Also referred to as “International Trade”. For example: Coca-Cola goes to China and establishes a Chinese business to bring Coca-Cola to Chinese consumers.
  • Crossborder Brand: When a US company hires a Chinese distributor or sells a franchise to a Chinese company to represent their brand in China and to sell their products to Chinese consumers. Also referred to as Crossborder. For example: Ralph Lauren retains a Chinese company to sell Ralph Lauren products in China to Chinese consumers.
  • Crossborder Commerce: When a US company sells directly to Chinese consumers from its US business. For instance, when a Chinese consumer buys product from a US company’s US store or website (either directly or through a marketplace). Also referred to as “XBorder”. For example Macy’s sells a product to a Chinese consumer through Macys.com or throughTmall.cn.

Forum Attendee: I understand Crossborder Business, Brand, and Commerce but I am not sure how to make a choice as to which to pursue.  What is best?

Jim Tompkins: A great question but there is not a simple answer. It is clear that Crossborder Business is the most complex, expensive and difficult, but has the potential for the greatest growth. It is also clear that Crossborder Brand is the least complex, inexpensive, and easy to accomplish, but also requires giving up control. Lastly, Crossborder Commerce is between Crossborder Business and Crossborder Brand but may be best for some firms. Which is best for each company can only be determined via a Feasibility Study. Each firm has a different position and objectives, and the only way to properly make the correct Crossborder choice is to conduct a study by evaluating all alternatives and timelines to establish the Crossborder road map that best achieves the company’s objectives.

Jim Tompkins
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